After trading real account(s) and loosing so many hard earned euros due to so many different reasons I decided to make a PLAN. Better late than never...
Also many professionals suggest making a journal, and a txt file in the desktop's corner can be.... forgot and lost quite easily. So why not here?
I understand my plan limits certain opportunities for profit and I made it fully acknowledging that. But it (hopefully) limits more opportunities for a loss that it limits opportunities for a profit.
Rules of the plan and reasons behind them:
1 Trading plan and chart templates (that are not marked as *unsure*) can be revised ONLY once a week on sunday and ONLY if a drawdown on the account is higher than 15% or the account was in drawdown for 4 weeks straight. The extra beta-testing plan (0.01 lot) can be made at a later time with at least 25 trades apart.
Reason: Too much switching is one of the worst sins.
2. After 10% drawdown, no more than 1% per trade. Period.
Reason: Revenge trading. Been there. More than once. More than twice.
3. No more than 2 trades per day, no more than 9 per week
Reason: Overtrading and getting a wrong idea of "it must retrace now. NOW NOW NOW". Going against trend.
4. Stop loss MINIMUM 15 pips (except rule 5)
Reason: Scalping for 2-5 pips as a way of trading ? Been there. More than once. More than twice.
5. Once a day, stop loss can be 10 pips, but ONLY if a trade is planned at least 1 hour ahead.
Reason: Jumping in on emotion. Also giving a little flexibility to rule 4.
6. After initiating a trade, either SL will be hit, TP will be hit (open no-tp trades must have mentally at least 1:2), BE will be hit (80% TP then BE), or the trade will exit friday before NY close - except rule 7.
Reason: I've edited SL and TP after being IN the trade way too many times. Almost always based on emotion.
7. If the trade is at least 50% in profit and there is a clear channel and London/NY is about to close and price is near the edge of the channel, then exit can be performed manually.
Reason: Giving a little bit of flexibility to rule 6.
8. Initiating a trade ONLY after checking forex calendar for red news.
Reason: I forgot couple of times... margin call due to stupid forgetfullness hurts.
9. R:R minimum of 1:1.5
Reason: No hardcore scalping.
10. Minimum of 10 minutes between trade idea and pulling the trigger.
Reason: Yeah Reason. Not emotion.
11. At least 2 technical reasons to trade or not to trade.
Reason: I followed a perfect trendline - only to see it break and return back to original trend. I followed perfect elliot wave to see it have a 6th wave. I entered a breakout after long and narrow range only to see it being fake. I entered on big ressistance line thinking the price cannot rise higher after such a tremendous uprise only to see it eat the ressistance like it's nothing.
Tools to choose from:
Trendlines
Fibonacci retracement and extension
Ressistance/Support
Haos mod mtf oscillator.
Only As filters (intended to use sporadically as hints):
Rainbow MA
Candlestick/VSA
J-boilinger
j-double-stochastic
Tools I purposefully will ignore:
- Classic Breakouts
- Harmonic patterns
- Normal patterns like double top/head and shoulders
- Elliot waves
- pivot points
- atr points
Reason: I cannot use them efficently, thus they cloud my judgement. Also many of those tools have it's representation in the tools I will use.
12. Fundamentals must agree.
Reason: Fundamentals are leading not lagging indicators.
13. Sentiment must agree.
Reason: A great contrarian indicator if big banks are hunting small fishes.
14. This question must be asked and answered:
Is it a preemptive entry or too late entry ?
Reason: Been there. More than once. More than twice.
15. Top-down look M,W,D must be checked
Reason: estimating overall bias
16. Checking other pairs for correlation
Reason: If rise is expected but all other correlated pairs are falling then...no trade.
17. *unsure* Scaling in can only be done twice within one trade (counts as one trade), with factor of 0.6 maximum.
Reason: Not sure this rule will stick. Not sure I will scale in at all.
Beginning: Monday 19th Dec. Account atm: 612 EUR.
Also many professionals suggest making a journal, and a txt file in the desktop's corner can be.... forgot and lost quite easily. So why not here?
I understand my plan limits certain opportunities for profit and I made it fully acknowledging that. But it (hopefully) limits more opportunities for a loss that it limits opportunities for a profit.
Rules of the plan and reasons behind them:
1 Trading plan and chart templates (that are not marked as *unsure*) can be revised ONLY once a week on sunday and ONLY if a drawdown on the account is higher than 15% or the account was in drawdown for 4 weeks straight. The extra beta-testing plan (0.01 lot) can be made at a later time with at least 25 trades apart.
Reason: Too much switching is one of the worst sins.
2. After 10% drawdown, no more than 1% per trade. Period.
Reason: Revenge trading. Been there. More than once. More than twice.
3. No more than 2 trades per day, no more than 9 per week
Reason: Overtrading and getting a wrong idea of "it must retrace now. NOW NOW NOW". Going against trend.
4. Stop loss MINIMUM 15 pips (except rule 5)
Reason: Scalping for 2-5 pips as a way of trading ? Been there. More than once. More than twice.
5. Once a day, stop loss can be 10 pips, but ONLY if a trade is planned at least 1 hour ahead.
Reason: Jumping in on emotion. Also giving a little flexibility to rule 4.
6. After initiating a trade, either SL will be hit, TP will be hit (open no-tp trades must have mentally at least 1:2), BE will be hit (80% TP then BE), or the trade will exit friday before NY close - except rule 7.
Reason: I've edited SL and TP after being IN the trade way too many times. Almost always based on emotion.
7. If the trade is at least 50% in profit and there is a clear channel and London/NY is about to close and price is near the edge of the channel, then exit can be performed manually.
Reason: Giving a little bit of flexibility to rule 6.
8. Initiating a trade ONLY after checking forex calendar for red news.
Reason: I forgot couple of times... margin call due to stupid forgetfullness hurts.
9. R:R minimum of 1:1.5
Reason: No hardcore scalping.
10. Minimum of 10 minutes between trade idea and pulling the trigger.
Reason: Yeah Reason. Not emotion.
11. At least 2 technical reasons to trade or not to trade.
Reason: I followed a perfect trendline - only to see it break and return back to original trend. I followed perfect elliot wave to see it have a 6th wave. I entered a breakout after long and narrow range only to see it being fake. I entered on big ressistance line thinking the price cannot rise higher after such a tremendous uprise only to see it eat the ressistance like it's nothing.
Tools to choose from:
Trendlines
Fibonacci retracement and extension
Ressistance/Support
Haos mod mtf oscillator.
Only As filters (intended to use sporadically as hints):
Rainbow MA
Candlestick/VSA
J-boilinger
j-double-stochastic
Tools I purposefully will ignore:
- Classic Breakouts
- Harmonic patterns
- Normal patterns like double top/head and shoulders
- Elliot waves
- pivot points
- atr points
Reason: I cannot use them efficently, thus they cloud my judgement. Also many of those tools have it's representation in the tools I will use.
12. Fundamentals must agree.
Reason: Fundamentals are leading not lagging indicators.
13. Sentiment must agree.
Reason: A great contrarian indicator if big banks are hunting small fishes.
14. This question must be asked and answered:
Is it a preemptive entry or too late entry ?
Reason: Been there. More than once. More than twice.
15. Top-down look M,W,D must be checked
Reason: estimating overall bias
16. Checking other pairs for correlation
Reason: If rise is expected but all other correlated pairs are falling then...no trade.
17. *unsure* Scaling in can only be done twice within one trade (counts as one trade), with factor of 0.6 maximum.
Reason: Not sure this rule will stick. Not sure I will scale in at all.
Beginning: Monday 19th Dec. Account atm: 612 EUR.